Class 7: Strategy Implementation

MG106 Strategic Management

José Ignacio González Rojas
j.i.gonzalez-rojas@lse.ac.uk

London School of Economics and Political Science

July 2, 2025

Today’s Investigation 🔍

Four Questions to Explore

1️⃣ What is Uber’s innovation?

2️⃣ Do you agree with the use of a surge pricing model?

3️⃣ Is advanced booking inefficient in ride-hailing?

4️⃣ Why couldn’t Uber implement its model in China?

Framework: Business Models → Platform Strategy → Implementation

Task: 10 minutes to discuss traditional taxi pain points 🚕

Go! Start with Pain Points 🚀

What frustrates you about traditional taxis?

Question 1: What is Uber’s Innovation? 💡

Traditional Taxi Experience

The Pain Points We All Know

Uncertainty & Risk 😰

  • Will I find a taxi?
  • How long will I wait?
  • What route will they take?
  • Is the driver trustworthy?

System Failures 🚫

  • No recourse for bad service
  • Peak hour shortage
  • Cash only payments
  • Language barriers

How does technology solve these problems?

The Business Model Revolution

From Ownership to Platform

Traditional Taxi Uber
WHO: Taxi companies WHO: Platform connecting two sides
WHAT: Transportation service WHAT: Real-time matching + trust
HOW: Own cars, employ drivers HOW: App, algorithms, ratings

Key Insight: Uber owns no cars, employs no drivers

Yet controls the entire experience 🎯

Value Creation Comparison

Where Each Model Excels

Which creates more value for customers?

Question 2: The Surge Pricing Debate 💰

How Surge Pricing Works

Economics 101 Meets Ethics

The Mechanism:

  • Supply < Demand → Price multiplier activated
  • Riders see price, must accept before booking
  • Drivers earn more → More drivers enter area
  • Eventually: Supply ↑ Price ↓
Scenario Multiplier $20 ride becomes…
Light rain 1.5x $30
Concert ending 2.5x $50
New Year’s Eve 10x 😱 $200

Economic efficiency or price gouging?

The $1,100 Question

Case Study: New Year’s Eve Edmonton

What Happened:

  • Normal fare: ~$110
  • Surge multiplier: 10x
  • Final charge: $1,114.71
  • Customer: “Intoxicated and vulnerable”

Discussion Points:

Is transparency enough? | Should there be caps? | Who benefits?

Question 3: Pre-booking Philosophy 📅

Two Different Approaches

Real-time vs. Advance Booking

Uber Says NO ❌

  • “Waste of resources”
  • 3-5 minute arrival promise
  • Dynamic optimization
  • Efficiency maximized

Didi Says YES ✅

  • Airport pickups crucial
  • Customer certainty valued
  • Serves less tech-savvy
  • Cultural preference

Key Question: Is this about efficiency or market understanding? 🤔

Question 4: Lost in Translation 🇨🇳

Uber’s China Challenge

What Seemed Transferable…

Global Advantages 🌍

  • $62B valuation
  • Platform expertise
  • Brand recognition
  • Superior technology
  • Deep pockets

But in China… 🚧

  • Streets change overnight
  • Different payment habits
  • Pre-booking essential
  • Local competitors backed by BAT
  • Regulatory maze

Technology ≠ Automatic success

Didi’s Home Advantage

More Than Just Local Knowledge

Product Adaptations:

  • Regular taxis integrated 🚕
  • Advance booking ✓
  • Destination input ✓
  • Multiple service tiers ✓
  • Local payment methods ✓

Strategic Backing:

Alibaba 💰 + Tencent 💬 = Ecosystem advantage

Later: Even Apple invested $1B 🍎

The Implementation Gap

From Strategy to Reality

Key Takeaways 📚

Lessons from the Platform Wars

Innovation isn’t enough 💡

  • Business model innovation powerful
  • But context matters more
  • Local adaptation essential
  • Implementation > Strategy

Platform competition intense 🥊

  • Network effects crucial
  • Local players have advantages
  • Deep pockets help but don’t guarantee
  • Strategic investors matter

The Bottom Line:

Great strategy + Poor implementation = Failure

Next: How do companies close this gap? 🌉

For Monday 📚

Ryanair: Dogfight over Europe

Read: Ryanair (A) and (B)

Questions to consider:

  1. Describe Ryanair’s launch strategy
  2. How did competitors respond?
  3. What went wrong?

Focus: Strategy execution and competitive dynamics ✈️